Before Greek Coalition Forms, Questions About Its Resolve

Evangelos Venizelos, right, head of the Pasok party, met Fotis Kouvelis, the head of the Democratic Left, in Athens on Tuesday.Credit
John Kolesidis/Reuters

ATHENS — Antonis Samaras, the leader of the center-right New Democracy party that finished first in the Greek parliamentary elections, was poised on Tuesday to form a coalition government with the Socialists and a smaller left-wing party.

In a televised statement on Tuesday, the leader of the Socialists, Evangelos Venizelos, said it was urgent to complete the negotiations quickly. The government could come together as early as midday on Wednesday, he added.

But even before the government could be formed, Greek political leaders were contending with its main structural flaw: that they must disown the very agreement that Europe had championed them for upholding.

Mr. Venizelos, in his comments on Tuesday, noted that many of the tough terms of the bailout that he helped work out while serving as finance minister had been “imposed” on Greece during the first phase of the negotiations, when the critical goal was to seal a deal quickly to ensure that Athens did not run out of money to pay its bills. He said that the agreement was always seen as open to revision.

At the same time, Mr. Venizelos and other leaders of his party, which is known as Pasok, as well as the top ranks of the third would-be coalition member, the Democratic Left, were hinting that they might seek to avoid responsibility for decisions of the new government by limiting their participation in the cabinet that would be formed under Mr. Samaras. They were also seeking to block any participation in the government by ministers who served under the governments that negotiated the original bailout agreements.

The new government will face a daunting double mandate to both enforce Greece’s loan agreement with its foreign creditors — the European Central Bank, the International Monetary Fund and the nations of the European Union — while renegotiating enough of the bailout terms to keep the government in power in the face of growing social unrest among the rapidly unraveling middle class. It must also reassure investors enough to slow the flight of deposits from Greek banks.

“Greek banks may be small,” said Carl Weinberg, the chief economist at High Frequency Economics, a consulting firm in Valhalla, N.Y., “but if the public doesn’t see that government authorities can ensure that the banks are safe at all times, then the banking system won’t be stable.”

Greece’s official creditors made no secret that they wanted Mr. Samaras to prevail over the leftist Syriza party, which placed a close second in the elections with its calls to tear up the loan agreement. The creditors have indicated that they are willing to talk about changes to the agreement, but it is unclear how far Europe’s leaders, particularly Chancellor Angela Merkel of Germany, are prepared to go in making concessions.

If the government is to survive long enough to carry out its obligations under the bailout agreement, analysts here said, it will need to extract significant changes from Greece’s lenders. While New Democracy and Pasok have enough members, barely, to form a majority in Parliament, that coalition is not likely to last long without other support, particularly from the Democratic Left party.

Fotis Kouvelis, the Democratic Left’s leader, said on Tuesday that his party would join the coalition if agreement could be reached on a platform to extend the timetable for Greece to meet its budget deficit targets and to revoke the harshest austerity measures, like the demand to cut the minimum wage.

Mr. Kouvelis said the most onerous terms of the bailout agreement had “decimated society.”

Liz Alderman contributed reporting.

Liz Alderman contributed reporting.

A version of this article appears in print on June 20, 2012, on page A5 of the New York edition with the headline: Before Greek Coalition Forms, Questions About Its Resolve. Order Reprints|Today's Paper|Subscribe